Unfair one-sided debate on ‘surge pricing’
In India, a lot of debate is happening on whether “surge pricing” charged by online cab-aggregators like Ola and Uber is fair. A comparison is also made to justify higher charges levied by traditional auto/taxi-wallas (despite their horrible customer service). But why single out and penalise online cab-aggregators only for “surge pricing” for the services they offer?
A friend of mine yesterday spoke about hotel booking rates and how these rates vary significantly based on user behaviour / demand. A hotel in Goa around year-end eve costs 2/3 times more than rest of the year, a classic example of “surge pricing” which we never complained about. There are several examples of other services where we pay a higher charge akin to “surge pricing”, even without realising it. Take for example -
1) An evening flight before a long weekend — prices generally increase many-folds;
2) A Private bus on an evening before a traditional holiday where people commute to home town;
3) So much so, Indian Railways too introduced a dynamic pricing in ‘Premium Tatkal’ (which I think has been rolled back). But they still retain a higher ticket fair for Tatkal (which is akin to a “surge pricing” for me);
4) Even Cinema charges more for Friday evening shows than those in the morning & weekdays (isn’t this a “surge pricing” that we happily pay?).
5) Hotels offer “Happy Hours” before peak time starts (a case of reverse “surge pricing” !)
6) Even vegetables cost more on certain days of the week, when wholesale market is closed and supply is lesser !
In substance, “surge pricing” is a reality of free-market economy. India ofcourse needs to continue to protect poor and regulate necessities. But otherwise , I hope we do not turn into Pre-1990 era and start regulating every action of the business. This will eventually kill innovation and growth.